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"Oil Trade Dormant Since '10 Revives As Brent Spreads Grow"

"Oil traders have the most incentive in four years to store crude at sea and sell it as prices rise, prompting speculation about a revival in the trade once used by companies including BP Plc and Citigroup Inc. "

"The prompt Brent spreads are at a level that incentives floating storage, that is, it becomes economic for companies to store crude on tankers," Amrita Sen, the chief oil analyst for Energy Aspects, said by e-mail yesterday. "It's a trade that proved profitable during the period of contango in 2008 to 2009."

"The collapse in the premium for near-term Brent supplies reflects both the return of Libyan shipments and subdued crude demand from refiners, Torbjoern Kjus, a senior analyst at DNB ASA in Oslo, said on July 10. Libya, the holder of Africa's biggest crude reserves, is preparing to resume exports from the Es Sider and Ras Lanuf terminals that were handed over last week by rebels seeking self-rule in the nation's east. "

"If Libyan exports continue to recover, Saudi Arabia, the biggest oil exporter, will adjust its output to prevent a surplus, supporting the front month, Barclays and Societe Generale said. This will cause the contango to reverse into the opposite condition, known as backwardation, in which the front-month trades at a premium to later deliveries, the banks said. "

http://www.bloomberg.com/news/2014-07-15/oil-trade-dormant-since-10-revives-as-brent-spreads-grow.html